The presidential candidates debated for the final time in the 2008 election season Wednesday at Hofstra University in New York. The focus of much of the debate was the failing economy, which saw another severe plunge throughout the day. The Dow Jones Industrial Average (INDU) closed down 733 points hours before the debate began. Senator Barack Obama emphasized the “failed policies and failed politics” of the past eight years while Senator John McCain stressed Obama’s questionable relationships with Bill Ayers and ACORN. The candidates first talked about their plans to restore the economy. McCain’s new plan proposes $52 billion in tax cuts on capital gains, increased stock loss write-offs and a tax waiver for unemployment benefits. The new plan is geared to work in concert with McCain’s proposed Homeownership Resurgence Plan, which would draw its funds from the $700 billion rescue package. Obama’s $60 billion stimulus package, which he announced Monday, includes tax breaks for middle class and low-income workers and small businesses. It also calls for an increase in government spending with the goal of generating some seven million new jobs, The New York Times reported Tuesday. Beginning the debate, McCain attributed Wall Street and government greed as well as efforts of Fannie Mae and Freddie Mac to the root of the subprime mess and the eventual collapse of the housing market. He acknowledged criticism that his plan to take $300 billion and buy up bad mortgages so borrowers can stay in their homes ignores the borrowers who managed to maintain their mortgage payments and stay out of default. These homeowners, McCain argued, are not benefited when their neighbors homes are foreclosed and stay vacant due to bad mortgages. The goal should be to keep people in their homes. “I’m disappointed secretary Paulson and others have not made that a priority,” McCain said. Obama called the rescue package a first step on the road to restoring the economy. His plan calls for a focus on job creation and tax cuts for the middle class as the next steps necessary in a bailout plan that, so far, has only addressed Wall Street and super-wealthy financial institutions. “What we haven’t seen is a bailout for the middle class,” he said. CBS News’ Bob Schieffer, the debate’s mediator, drew the candidates’ attention to their claims that they could reduce the national deficit although the plans they have proposed would each add an estimated $200 billion in deficit. Schieffer asked if the candidates were “ignoring reality,” or whether they could give specific areas of government spending they plan to cut in order to reduce the deficit. While Obama gave no specific cuts, he repeated his intention to go through government programs “line-by-line” and cut unnecessary spending items. “There is no doubt we’ve been living beyond our means,” Obama said. McCain managed to list specific items, including a marketing assistance program, a number of subsidies for ethanol and a tariff on imported sugar cane-based ethanol. The focus of his proposed cuts took the form of energy independence. McCain urged the government to stop sending billion dollars a month to “countries that don’t like us very much” to sate America’s need for foreign oil. He stressed his experience in defense as a key factor in his ability to balance the national budget in his first term as president. With language that became recurrent throughout the debate, McCain told the story of Obama encountering a plumber named Joe, who said he wanted to become a business owner but questioned Obama on the taxation of businesses through his plan. “Joe the Plumber,” as McCain called him, feared higher taxes would prevent him from hiring the extra workers he would need to run his business. McCain criticized Obama’s widely-publicized remark of, “Let’s spread the wealth around,” asking Obama directly if that plan involved taking money from Joe the Plumber and giving it to Obama. “I’m not going to spread his wealth around,” McCain said. “I’m going to let him keep his wealth.” Obama likened that strategy to the same economic policy that’s been in place through the Bush administration for the past eight years. He said taxes are necessary to support the economy and, although they are unpopular, they will turn around eight years of failed economic policy. “I am not President Bush,” McCain said. “If you wanted to run against President Bush, you should have run four years ago.” During the debate, Schieffer turned the discussion toward negative campaigning from both sides. “I regret some of the negative aspects of both campaigns,” McCain said, later acknowledging, “this is a tough campaign.” “We expect presidential campaigns to be tough,” Obama said. Obama said the American people are more concerned about the presidential candidates’ ability to discuss key issues and “less concerned about our hurt feelings” over comments made in the campaign. He invited McCain to focus on such key issues as economic recession and the housing market crash during the next three weeks. “We’re going to have to be able to work together…to disagree without being disagreeable,” Obama said. “What we can’t do is characterize each other as bad people.” The candidates also spoke extensively about the qualifications of their running mates, the effectiveness of their plans for health insurance, energy independence, abortion and education. Disclosure: The author held no relevant positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade. Editor’s Note: To contact the reporter on this story, email diana.golobay@housingwire.com.